A federal judge in San Francisco has quashed a baseless subpoena aimed at outing an anonymous online critic of Pennsylvania corporation USA Technologies after the Electronic Frontier Foundation (EFF) successfully argued that the First Amendment shields the identity of anonymous speakers who engage in lawful speech.

“All too frequently, companies turn to the courts in misguided attempts to chill speech and ‘out’ their critics,
believing that those critics lack the resources or will to defend themselves,” said EFF Senior Staff Attorney Matt Zimmerman. “The First Amendment ensures that vigorous debates about matters of public concern can continue unabated, a fact that the court correctly recognized.”

EFF represents Yahoo! user “Stokklerk,” who criticized USA Technologies and its CEO, George Jensen, Jr., on a Yahoo! message board, drawing attention to plummeting stock prices, high compensation rates for executives, and a consistent lack of profitability. Other anonymous posters had similar complaints.

In response, USA Technologies filed a lawsuit in the Eastern District of Pennsylvania alleging that the
statements violated federal securities regulations, because they were part of a “scheme” for the authors to “enrich themselves through undisclosed manipulative trading tactics.” USA Technologies also alleged that the online posts — which characterized USA Technologies’ executive compensation practices as, among other things, “legalized highway robbery” and a “soft Ponzi” — were defamatory. Pursuant to that lawsuit, USA Technologies issued a subpoena out of the Northern District of California to Yahoo! demanding the critics’ identities.

In her ruling, Judge Susan Illston agreed with Stokklerk and quashed the subpoena, recognizing “the Constitutional protection afforded pseudonymous speech over the internet, and the chilling effect that subpoenas would have on lawful commentary and protest.” Judge Illston further found that none of the statements at issue were defamatory in context and were instead “protected opinions” under the First
Amendment.

“We’re gratified that the Court saw it the way we did,” said David M. Given of Phillips, Erlewine & Given LLP,
which served as co-counsel with EFF in the matter. “The First Amendment principle at stake in this case is
paramount to preserving the free interchange of ideas and opinions on the Internet.”